The dollar remains strong, while the euro loses as concerns over Europe’s COVID issue grow.

Economic World News :

On Monday, the safe-haven US dollar rose around a 16-month high against the euro, reflecting increased concern about the impact of rising COVID-19 infections across Europe, with Austria reimposing a full lockdown and Germany mulling doing the same.

The dollar was approaching its highest level since early October against the weaker Australian and Canadian currencies, with the commodity economies linked also under pressure from a drop in crude oil prices.

The dollar received fresh support on Friday from positive comments by Federal Reserve officials Richard Clarida and Christopher Waller, who suggested that a faster pace of stimulus withdrawal may be justified given the economy’s rapid recovery and high inflation.

A faster finish to tapering raises the prospect of early interest rate increases. The market now expects the Federal Open Market Committee (FOMC) to begin raising interest rates by the middle of next year.

The dollar index, which compares the currency to six major peers, was little changed at 96.148, remaining close to last week’s 16-month high of 96.266.

The euro fell 0.25 % to $1.12705 on Friday, a 16-month low.

Chris Weston, chief of research at Melbourne brokerage Pepperstone, Said 

“The EURUSD has been in free fall and will likely receive the lion’s share of attention from clients looking for a play on Europe’s escalating limits and tensions,”

Europe has once again become the pandemic’s epicenter, accounting for half of all cases and fatalities worldwide.

Austria will be the first country in Western Europe to impose a complete COVID-19 shutdown beginning Monday.

Concerns that a European downturn would reduce energy consumption weighed on crude oil, which was also down on the potential of a U.S.-led drawdown of emergency stocks.

The dollar rose 0.10 % against the Canadian dollar linked to oil to 1.2640, close in on Friday’s high of 1.2663, the highest level since Oct. 1.

The USD/JPY pair edged up 0.17% to 114.18.

The AUD/USD pair inched up 0.10% to 0.7242 while the NZD/USD pair was down 0.31% to 0.6988. The Reserve Bank of New Zealand will announce its policy decision on Wednesday.

The USD/CNY pair dropped down 0.03% to 6.3845 and the GBP/USD pair edged down 0.15% to 1.3432.

Cryptocurrency News :

El Salvador aims to establish the world’s first “Bitcoin City,” first funded by bitcoin-backed bonds, President Nayib Bukele announced on Saturday, doubling down on his bet that the crypto currency will spur investment in the Central American country.

Speaking at the end of a week-long bitcoin campaign in El Salvador, Bukele stated that the city planned in the eastern province of La Union would use geothermal energy from a volcano and would not impose any taxes other than the value added tax (VAT).

Bukele estimated that the public infrastructure would cost roughly 300,000 bitcoins and that half of the VAT levied would be utilized to support the bonds issued to develop the city.

El Salvador became the world’s first country to adopt bitcoin as legal tender in September.

Although Bukele is a popular president, opinion polls reveal that Salvadorans are wary of his love of bitcoin, and its rocky rollout has sparked anti-government protests.

Bukele compared his concept to Alexander the Great’s cities, saying Bitcoin City would be circular, have an airport, residential and commercial sections, and a central plaza meant to look like a bitcoin symbol from the air.

Important news that could affect the Economic Markets Today :

  • Composite PMI (UK)
  • Wholesale Sales (MoM) (CAD)
  • Existing Home Sales (Oct) (USA)
  • ECB’s De Guindos Speaks  
  • Core Retail Sales (QoQ) (NZD)

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